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Year: 2023

  • Altria’s ‘Juul Trial’ Begins

    Altria’s ‘Juul Trial’ Begins

    Image: Tobacco Reporter archive

    The trial of San Francisco’s public school system against Altria Group began on Monday, with Thomas Cartmell, a lawyer for the San Francisco Unified School District, stating to jurors, “This case is about Altria, the largest cigarette company in our country, who helped hook a whole new generation of our young people on nicotine, causing a vaping crisis, a youth epidemic,” reports Reuters.

    Beth Wilkinson, a lawyer for Altria, told the jury in her opening statement that the company had aimed to boost sales among cigarette smokers seeking a less harmful option, not among teens. “You can’t forget about those smokers,” she said. “If you can get smokers away from cigarettes, it’s a worthy cause.”

    The school district also sued Juul, which settled that lawsuit last year. Cartmell told jurors that Altria, which was Juul’s largest investor from 2018 until earlier this year, when it exchanged its stake for a license to certain Juul intellectual properties, was “at the heart” of Juul’s strategy to grow its business by appealing to teenagers with sweet flavors and flashy advertising.

    According to Cartmell, Altria made its large investment in Juul after being unsuccessful with its own e-cigarette, and the company knew Juul’s success was driven by youth usage, according to Bloomberg. Juul’s device was “marketed to appeal to the young, cool, popular crowd” and was “packed with nicotine,” Cartmell said.

    Wilkinson argued that evidence would not support this. Juul sales fell after Altria’s investment, and Altria’s investment occurred after Juul pulled most of its flavored products off the market, according to Wilkinson, reports Law.com.

    The San Francisco schools’ lawsuit was chosen to go to trial as a test case.

  • Insurance Agent Sued for Excluding Batteries

    Insurance Agent Sued for Excluding Batteries

    Image: Tobacco Reporter archive

    Four vapor companies have sued Kinsale Insurance Co. in U.S. federal court, claiming the insurer dropped coverage for batteries but failed to fully inform the policyholders before denying a claim.

    If the case goes to trial and appeal, it could potentially help clarify insurers’ and insureds’ responsibilities when policy wording is changed or exclusions are added.

    “Defendant owed a fiduciary duty to plaintiffs based on trust and good faith that required defendant to act in the best interest of plaintiffs, its customers,” reads the lawsuit complaint, filed last week in U.S. District Court in Nashville. “It is reasonable for the insured to assume the policies provided the requested coverage.”

    Based in Richmond, Virginia, Kinsale Insurance offers casualty and specialty casualty insurance for cannabis, transportation and other industries. It has not yet filed an answer to the complaint, according to the Insurance Journal.

    Industry experts, however, said that the practice of changing coverage without fully notifying customers is not uncommon and is rarely challenged. And Tennessee law may be unclear on how far an insurer must go in notifying policyholders of changes and how specific notifications should be.

    Battery fires from nicotine and cannabis vape devices are relatively uncommon but have become a worldwide concern for consumers, fire departments and insurers. In October 2022, Michael and Elisha Schmidt suffered a fire, reportedly from a vape pen battery, and sued four vape companies over the damage.

    The companies, Isabella Industries, Maelynn Industries, Sancia Industries and Illumivaption, all had umbrella and general liability policies with Kinsale for seven years. But when the vape sellers renewed their policies in October 2022, Kinsale excluded batteries and battery fire claims from the policies while raising premiums, the suit claims.

    “Defendant led plaintiffs to believe that the batteries were covered after the renewal,” the complaint reads. “Defendant did not inform plaintiffs that it had removed batteries from the coverage and did not ask Plaintiffs prior to doing so.”

    The plaintiffs also argue that the policy wording was ambiguous and illusory and thus unenforceable under Tennessee law. The companies had always paid their premiums on time and had been loyal customers to Kinsale, they noted.

    When the Schmidts filed their lawsuit, the vape companies filed claims with Kinsale. But the insurer denied the claims, arguing that the policies did not cover batteries. Kinsale would not provide a legal defense for the insureds.

    The vape sellers argue that Kinsale’s refusal amounted to bad faith and unfair trade practices and has cost the companies damages and attorney fees. They are asking for compensatory damages, punitive damages, legal fees and a declaration that the insurer must provide coverage and a defense.

  • Singapore: Smoking Cost Up

    Singapore: Smoking Cost Up

    Image: Tobacco Reporter archive

    The cost of cigarettes and alcoholic beverages in Singapore has increased by 11 percent from the previous year, according to the latest data from the Singapore Department of Statistics, reports The Star. 

    The price increase follows a 15 percent excise duty increase for tobacco products included in the government’s 2023 budget.  

    Singapore’s key consumer price gauge rose 5 percent in March, slightly lower than the forecast 5.1 percent increase.  

    The Monetary Authority of Singapore said that core inflation will remain elevated in the next few months but should progressively ease in the second half of 2023 and end the year significantly lower. 

  • Unfit for the Counter

    Unfit for the Counter

    Unwrapping the issue of counterfeit and noncompliant vapes

    By Lee Bryan

    Photo: uliab

    It feels as though you can’t check the news these days without reading about rogue traders dishing out vapes to kids or stumbling across the latest report about Trading Standards—the U.K. authority charged with enforcing consumer protection legislation—seizing a few thousand counterfeit devices.

    National newspaper headlines about youth vaping and environmental damage have changed public perceptions on the reduced-risk product, and evidence shows that many people wrongly believe vapes are equally or more harmful than cigarettes, leading some smokers to decide against making the switch. 

    The U.K. government has historically been pro-vaping, taking an evidence-based approach and encouraging smokers to switch as part of its smoke-free 2030 ambitions. However, a minority within the industry who flout the law and put their profits above all else are putting all of this at risk for the sake of their own greed.

    The vape sector is primarily a community of well-intentioned retailers, manufacturers, distributors and activists whose main priority is to help adult smokers move away from combustible tobacco, and as the head of a leading vape compliance firm, I’ve seen this firsthand.

    The unscrupulous sellers, who provide so much ammunition to the mainstream media, are as much at odds with the rest of the harm reduction community as they are with regulators and health officials. They must be stopped before they take vaping from being one of the most popular and effective stop smoking tools available in the U.K. to public enemy No. 1.

    Where Are Brands Falling Short?

    As a leading authority on vape regulations, we at Arcus Compliance understand how complex the road to a compliant status can actually be and recognize the challenges of meeting legal obligations.

    Even those with the best intentions can fall foul of regulations if they don’t have the right knowledge, and our job is to help them navigate this often difficult terrain.

    In fact, we conducted an industry-wide analysis that uncovered the most common ways that vaping products fall short of regulatory requirements. These included:

    • inadequate checks to ensure e-liquid recipes do not contain inappropriate substances in specific markets;
    • copying competitors’ labeling;
    • notifying the wrong product type to the regulator;
    • reusing former identifier codes for new products; and
    • lacking systems for tracking adverse safety events.

    In many cases, these can be put down as simple mistakes, but errors like these can make the regulatory process more expensive and complicated for brands.

    They can also bring a product’s journey to approval to a grinding halt and land it in hot water with the Medicines and Healthcare products Regulatory Agency (MHRA), the body responsible for overseeing the U.K. market.

    It’s critical that brands avoid these common pitfalls and ensure their vape products are up to standard across the board, especially when tensions over industry compliance are so high.

    Wholesalers and retailers must also step up and play a role here by demanding only the highest levels of compliance from products and brands, not only to protect their own reputations but also the reputation of the entire sector.

    Recognizing the need for further regulatory support in the industry, Arcus Compliance recently teamed up with distributor Phoenix 2 Retail to deliver a “Pre 2 Post-Market Compliance Testing Program.”

    This collaborative effort aims to support and maintain industry standards while also encouraging the evolution of policies that raise the bar when it comes to responsibility. 

    Sadly, there’s no denying that a small pool of traders are knowingly going against the law to line their own pockets—typically by selling to minors or pedaling youth-appealing products.

    They cast a dark cloud over our industry and deserve to feel the full force of the law, which is why I welcome the recent comments of Neil O’Brien, the parliamentary under-secretary of state at the Department of Health and Social Care, to clamp down on regulatory noncompliance, set up a Trading Standards “flying squad” to enforce the rules and tackle illicit vapes and underage sales and to set up a national test purchasing scheme—something for which the U.K. Vaping Industry Association has long been advocating.

    Policies like these represent a significant forward step in combatting the noncompliant sector, and I’m confident that they can be the foundation on which we can level up accountability and responsibility in the U.K. vaping arena.

    By coming down hard on those who flout the law, policymakers can protect young people, prevent underage sales and allow the compliant vape industry to thrive.

    Where Does Policy Need to Go From Here?

    While the government’s renewed determination to stop rogue traders and prevent youth access is wholly welcome, we can’t allow ourselves or our politicians to make the mistake of thinking the problem is now solved—the reality is that we are a long way from the finish line.

    If nothing else, lawmakers should take onboard other recommendations put forward by the UKVIA, including increased fines of up to £10,000 ($12,409) per instance for those caught selling to minors and a retail registration scheme.

    It’s also high time we reviewed the arbitrary limit on e-liquid volume for vapes. If we were to increase this from the current legal maximum of 2 mL to a more substantial 10 mL, we could make e-cigarettes far too expensive for young people to buy while ensuring vapes remain competitively priced against cigarettes.

    More urgently, regulators need to tighten their grip around product and packaging by introducing more checks during the market approval process.

    It still amazes me that brands don’t have to upload any pictures to the MHRA when they apply for permission to sell in the U.K., and making this one, relatively small, adjustment could make a big difference to the compliance issue by preventing products with child-appealing imagery—i.e., cartoon characters and copycat candy designs—from ever making it onto the shelves.

    Preemptive strategies like this will help wash away vapes that are blatantly trying to catch the attention of kids, reaffirm the industry as adult-focused and could prove to be an invaluable tool in the fight to eliminate youth use and underage access.

    The government must now build on the new momentum brought forth by its newly announced measures by engaging in conversation with industry experts and implementing balanced policies that target the illegal market while supporting vaping as a public health tool.

    Regulators, retailers, health officials and advocates together are perfectly positioned to pioneer a new age of vape compliance—I only hope we can seize this critical opportunity.

    Lee Bryan is the CEO of Arcus Compliance.
  • Excitement at First Shisha Tobacco Sales

    Excitement at First Shisha Tobacco Sales

    Photo: Cavendish Lloyd

    Sales of shisha tobacco, which opened for the first time at the tobacco sales floor in Harare on April 21, were met with excitement by farmers and buyers, reports The Herald.

    Shisha tobacco is proving to be popular in Zimbabwe, and the Tobacco Industry and Marketing Board (TIMB) has licensed one company, Cavendish Lloyd Tobacco, to support shisha tobacco production in the country.

    The first bale of shisha tobacco sold for $5, and the highest price was $5.30.

    “Today, I delivered 15 bales,” said Moses Machine, a Mutorashanga farmer who expects to deliver 400 bales to the sales floors. “There are several advantages associated with growing this type of crop. Plant population will double the Virginia tobacco. Shisha uses less fertilizer. Since it is the first year, we are not sure where the viability is, but with time, we are going to have a proper analysis. There is use of less labor and fertilizers. In terms of costs of production, there is a difference compared to the Virginia one. There are plenty of good points, but, yes, we may encounter challenges since it is the beginning..

    “I recommend farmers to grow this type of tobacco; no curing using firewood, hence it is cheap to cure. Farmers need to maximize production; air is the major source of the energy. Shisha tobacco production is a welcome development.”

    “The tobacco needs very special attention because the plant or the leaf is very thin, so if you don’t carefully handle it, the leaf itself breaks,” said Jayson Scott, a Marondera farmer. “I have delivered 15 bales, and if everything goes well, l will increase hectarage.”

    TIMB Sales Supervisor Pelagia Marumahoko said the regulator is expecting about 100 hectares for shisha production this season, and markets are readily available in Africa.

    “We have licensed Cavendish Lloyd Tobacco to contract growers growing shisha at the present moment. It doesn’t only contract our farmers, but it also processes this tobacco locally. So far, we have 12 farmers who grow shisha tobacco throughout all the tobacco growing regions,” said Marumahoko.

    Chemical applications for pest and insect control and growth period are the same as other tobacco cultivars such as Virginia tobacco. The crop is reaped when the leaves have completely lost all the nitrogen and have fully ripened. It is cured using the same flue-curing barns, temperature and humidity regimes for the Virginia flue-cured tobacco, and it takes four days to five days to complete curing.

    The cured leaf has to have low nicotine content to protect the smoker from inhaling huge amounts of nicotine since shisha tobacco is about constant smoke inhalation in huge quantities.

  • Dutch Minister: Ban Filters to Reduce Litter

    Dutch Minister: Ban Filters to Reduce Litter

    Photo: Yakiv

    The best way to prevent cigarette filter litter is a ban, the Netherland’s junior infrastructure minister, Vivianne Heijnen, said in a briefing to Members of Parliament.

    An outright ban on filters is the most effective option to achieve the government’s target of reducing filter litter by 70 percent, according to Heijnen. The current model of discouraging smoking and littering, she says, will result in only a 15 percent reduction by 2026.

    Cigarette filters contain chemicals and microplastics, which take years to break down.  take years to break down. 

    A filter ban would have to be Europe-wide, Heijnen told Dutch News, because a uniquely Dutch ban would be in contravention of the European free trade agreement. She suggested a ban be included in the 2026 renewal of the European guideline on single-use plastics.

    More local bans on smoking at beaches and more smoke-free festivals and smoke-free zones in public spaces are also among the measures Heijnen proposed.

  • Activists Urge Thailand to Lift E-cigarette Ban

    Activists Urge Thailand to Lift E-cigarette Ban

    Photo: Teo

    End Cigarette Smoke Thailand (ECST) is urging Thailand to legalize vaping, citing the U.K. progressive approach to e-cigarettes as an example, reports Thaiger.

    In Thailand, the sale and use of e-cigarettes are illegal, creating an unregulated black market and increased access for minors, according to ECST. 

    “E-cigarettes are legal in England, allowing its government to impose measures and effectively enforce the regulations to protect minors,” said Asa Saligupta, a representative of the ECST and the Facebook page “What are e-cigarettes?” “The U.K. government is set to allow £45 million [$56.05 million] to reduce the country’s smoking rate and another £3 million for clamping down on shops selling vapes to youths under the age of 18.” 

    “The ban [in Thailand] is claimed to protect minors, but the sales and use of e-cigarettes are overt and commonplace. Children can easily access e-cigarettes through online channels without any regulations or inspections,” said Saligupta. 

    Following the U.K.’s example could be the solution to Thailand’s e-cigarette policy issues, according to Maris Karanyawat. “The subcommittee for studying factors affecting the health system and monitoring the enforcement of public health laws issued a report, which is based on a comprehensive study and opinions of all groups involved in the e-cigarette issue. The report suggests that Thailand should lift the ban on e-cigarettes so that they can be appropriately controlled through the 2017 Tobacco Products Control Act.” 

    In preparation for the upcoming tenth session of the Conference of the Parties to the World Health Organization Framework Convention on Tobacco Control, scheduled to take place in Panama in November, Karanyawat said, “We hope that the Thai delegates will take into account the public health committee’s report, which recommends that a tobacco harm reduction approach be developed based on new scientific evidence which shows that e-cigarettes should be controlled differently from combustible cigarettes because they have different harmful effects.” 

  • Bosnia and Herzegovina Tax Collections Plunge

    Bosnia and Herzegovina Tax Collections Plunge

    Photo: Frank Parker

    Income from excise taxes on domestic tobacco and tobacco products in Bosnia and Herzegovina (BiH) has decreased one hundredfold in six years, reports The Sarajevo Times, citing data from the BiH Indirect Taxation Administration (ITA). 

    According to the data, during the last year, BiH received about BAM2 million ($1.13 million) from excise taxes on tobacco and tobacco products compared to hundreds of millions in previous years. 

    “Thus, in 2009, based on these excise taxes, BAM171 million was earned; in 2010, BAM216 million; in 2011, BAM240 million; in 2012, BAM231 million; in 2013, BAM207 million; in 2014, BAM203 million; in 2015, BAM233 million; in 2016, BAM207 million; in 2017, BAM190 million,” the ITA data states. 

    The shutdown of tobacco factories in Banja Luka, Sarajevo and Mostar contributed most to the decrease. 

    Tobacco cultivation has slowly declined. “My wish is to maintain tobacco production, to gradually, in agreement with the relevant ministry and local self-government, try to return that production to some values that were in previous years,” said Svetozar Mihajlovic, owner of Duvan, one of the few remaining companies purchasing leaf.  

    “So, we see that domestic industry is practically shut down, and that is the best explanation of this indicator,” said economist Slavisa Rakovic. “If domestic industry had been maintained, not only would we have revenues from excise taxes at a much higher level, but the level of added value through processing would have been much higher, and taxes and contributions from employees’ salaries would have been significant. But what can be done …. It can be expected that with such policies, we will wait for the day when it is not worth doing anything here but to deal with politics.”

  • Scandinavian Tobacco Group Acquires XQS

    Scandinavian Tobacco Group Acquires XQS

    Scandinavian Tobacco Group is acquiring substantially all assets of XQS International in Sweden The transaction value consists of an upfront payment as well as an earnout agreement, STG announced in a press note.

     Assuming all targets are met, the total purchase price will be about DKK150 million ($22.19 million), and it will be fully financed by cash at hand and debt.

    XQS is active in smoke-free products, and its products are primarily sold in Sweden. In 2022, XQS’ reported net sales were about DKK50 million with a low single-digit EBITDA margin and a total volume of 3 million cans.

  • Malawi Growers Encouraged by Prices

    Malawi Growers Encouraged by Prices

    Photo: Taco Tuinstra

    Tobacco growers in Malawi have been pleased with prices as the 2023 selling season progresses, according to an article by Xinhua

    The tobacco market opened on April 12. According to Auction Holdings Limited (AHL), which runs the tobacco sales floors in Lilongwe, the average sales price rose from $1.8 per kilo to $1.88 per kg during the first sales days.

    Farmers at the Limbe Auction Floors in Blantyre, the country’s commercial hub, said they would do very well if the trend persists. “I’m very excited with the prices, and going like this, I’m optimistic that I’ll make more gains than I’ve ever anticipated,” tobacco grower Ben Sakwi was quoted as saying by Xinhua on April 18. 

    Tobacco Association of Malawi Trust President Abel Masache Kalima Banda said the good prices would help offset the significantly increased cost of production during the recent growing season.

    Tobacco is Malawi’s leading foreign exchange earner, accounting for more than half of the country’s exports. 

    The Tobacco Commission expects 126 million kilos of tobacco to be sold this season, up from 85 million kilos produced last season. 

    The high prices are a result of strong demand for Malawi leaf, which is estimated at 170 million kilos, according to the AHL.